The options are very different if you are buying insurance on your own. After a tumultuous few years -- when many insurers stopped selling individual health insurance or repeatedly boosted premiums by double digits -- the market is turning around. More insurers are selling individual policies again or expanding into new counties and states, and now fewer areas are left with only one insurance option.
"It hit bottom last year, when we had a lot of exits from big insurers," says Katherine Hempstead, senior policy adviser with the Robert Wood Johnson Foundation, which studies the health insurance market. "But the carriers who stayed in the market have figured out how to make money and develop different provider networks, and they understand the customer better." For example, many counties in Ohio and Pennsylvania had only one insurer in 2018, but more areas will have two or three insurers selling individual coverage in 2019, she says.
Paul and Nancy Melquist of Shoreview, Minn., started buying their own coverage in 2017, after Paul retired at age 58 from a career in the defense industry. Because the Melquists don't have many regular medical expenses, they chose the plan that had the lowest premium but also a $6,600 deductible for each person. Even so, the Melquists paid $1,250 per month in premiums. Their only medical expense for the year ended up being their annual physicals. "We paid $15,000 for two physicals, which was not a satisfying financial transaction," Paul says. They did contribute money to an HSA. Their premiums went down slightly in 2018, to about $1,165 per month, and they're hoping they'll have some lower-cost options for 2019.
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The average rise in premiums for individual policies is expected to slow in 2019, to about 5% -- and average premiums are even going down in a few states, such as Tennessee, says Hempstead. You may have more insurers to choose from and more low-cost options during open enrollment this year, which runs from November 1 to December 15 (although a few states have extended the deadline).
Strategies for people with higher incomes. People who earn too much to qualify for a subsidy to purchase a policy on a state exchange may face sticker shock -- especially if they're in their fifties or early sixties and have to pay up to three times what a younger person might pay. You qualify for a subsidy if your income is below 400% of the federal poverty level (which is $48,560 for singles, $65,840 for couples and $100,400 for a family of four). In that case, you should generally buy insurance on your state's health insurance exchange; go to www.healthcare.gov for links.
Policies are still pricey, but fortunately, most buyers have more options in 2019 than before. The best strategy is to "leave no stone unturned when it comes to evaluating all of the plans available in your zip code," says Bernard Health's McCostlin. You can shop for policies on your state exchange even if you don't get a subsidy. Or you can go through a Web broker, such as eHealthInsurance.com, or buy directly from the insurer. You can also work with a health insurance agent (find one in your area at www.nahu.org).
It's best to buy coverage through your state's health insurance exchange if there's any chance that your income could qualify you for a subsidy. But you may have some options off the exchange that aren't eligible for a subsidy but still meet the Affordable Care Act standards (which specify 10 essential health benefits, no maximum coverage limit and no preexisting-condition exclusions). Some insurers may offer off-exchange policies with different premiums, cost-sharing or provider networks than their on-exchange versions.
It's particularly important to look at off-exchange options if you're interested in a silver-level policy. The plans sold on the state insurance exchanges fall into four different levels based on the amount of coverage they provide, with bronze policies generally having the highest deductibles (and lowest premiums), silver policies providing slightly lower deductibles and co-payments, and gold and platinum providing even more coverage.
Most insurers continue to "silver load" their premiums -- that is, they charge a lot more for silver plans on the exchanges now that the government no longer reimburses them for cost-sharing subsidies, which help pay deductibles and co-payments for lower-income people. But a few insurers, including Kaiser Permanente, offer an off-exchange version of the silver plan with a much lower premium.
If you're retiring early or leaving your job, check out the cost of continuing your current coverage under COBRA, a federal law that lets you keep your employer's coverage for up to 18 months after you leave your job. You have to pay the employer's and employee's share of the costs, but that could be your best deal, says Wayne Sakamoto, a health insurance agent in Naples, Fla.
The federal penalty for not having insurance will disappear in 2019 (although some states have their own penalty), and new rules are expanding some types of coverage that don't meet the ACA standards. Such policies may have lower premiums, but they also shift more risk to you. "I would look at these alternative options very cautiously. It's very much a buyer-beware market," says Sabrina Corlette, research professor at the Georgetown University Center on Health Insurance Reforms.
For example, starting in October, insurers may offer short-term plans that last for up to 12 months (short-term plans had been limited to three months) and may be renewed for up to three years at the insurer's discretion. "But the insurer can look at your health status and decide whether or not to renew it," says Corlette. Some states have imposed stricter rules.
The premiums for short-term policies can be a lot less than they are for ACA-compliant policies, but they don't have to cover the ACA's 10 essential health benefits (such as maternity care), and they can exclude preexisting conditions or reject you because of your health. Short-term policies generally don't cover prescription drugs, but they may provide a drug discount card, says Paul Rooney, of eHealthInsurance.com, which sells both short-term and ACA-compliant policies. They can also have annual or lifetime caps on coverage, such as $500,000 or $1 million, says Sakamoto, who generally only recommends them for a few months.
Strategies to qualify for the subsidy. If your income is close to the cutoff, you may be able to lower your income to qualify for a subsidy. Contributions to a 401(k), a health savings account, or a health care or dependent care flexible spending account can help reduce your modified adjusted gross income, which is used in the subsidy calculation. Early retirees -- who pay some of the steepest premiums without a subsidy -- often have flexibility to reduce withdrawals from tax-deferred retirement savings.
Leanne and Carl Bryson have been buying health insurance on their own since Carl retired from Apple four years ago, at age 59. When the Sacramento couple looked at eHealthInsurance.com to compare rates for policies with and without a subsidy, they decided it was worthwhile to tighten their belts to qualify for the subsidy until they are old enough for Medicare. They are withdrawing less money from their 401(k)s and IRAs in order to keep their modified adjusted gross income below the $65,840 cutoff. They also cut back on travel and gifts to their grandkids.
Even with the subsidy, their coverage was becoming unaffordable. The full price for their policy was set to rise to $3,200 per month in 2018, which would still cost them $1,800 with the subsidy. They went back to eHealthInsurance.com during open enrollment last fall and looked into alternatives. "In California, we're lucky that we have a lot of options, but they can be pricey," Leanne says. The couple switched to an HMO that cost them $850 per month after the subsidy, in exchange for a smaller provider network.
Use the calculators at www.healthcare.gov to compare the after-subsidy costs of policies you're shopping for. Estimate your income carefully. If you end up earning more than the cutoff, you'll have to pay back the subsidy when you file your taxes; if you earn less, you’ll get extra money back at tax time.
In addition to comparing post-subsidy premiums, estimate your out-of-pocket costs for the type of care you use and prescription drugs you take, and compare the plan's maximum out-of-pocket spending limits and provider networks. Don't assume your doctors will still be covered by the plan's network in 2019. "In our survey, 36% of carriers said they're planning to restrict their networks next year," says Rooney, of eHealthInsurance.com, which has a provider search tool to look up which plans your doctors belong to.
You may be able to lower your premiums by switching to a plan with a smaller network, but you'll have to pay a lot more if you go out of network -- and a growing number of plans don't provide out-of-network coverage at all, except for emergencies. Check to see whether the hospitals you want to use are still included.
Ross Volpe, 34, a professional disc jockey who lives in Arlington, Va., has income from a variety of sources: DJ gigs (he just won a national competition), private lessons, and teaching classes and camps at the Beat Refinery in Bethesda, Md. Even though he qualifies for a subsidy, his share of the premiums after the subsidy have still increased steadily every year -- from $45 per month for a CareFirst Blue Cross Blue Shield PPO plan in 2014, to $212 per month in 2017. His premiums were about to go up to $320 per month in 2018 -- after a $200 subsidy. "I couldn't do that anymore," he says. He shopped around for other options during open enrollment last year and found a Kaiser Permanente HMO plan that cost him just $60 per month with the subsidy.
When shopping for coverage, he looked not only at the premiums but also at the deductibles, co-payments and the insurer. A few plans with lower premiums were with companies he didn't know and had much higher deductibles and co-payments.
Volpe picked a silver plan because of the balance between cost and coverage. He has to use a limited provider network with Kaiser, but he doesn't go the doctor much, and he had Kaiser insurance when he was a kid, so he was used to it. "It's in the building I went to when growing up," he says.
There's an added bonus for picking a silver plan if you earn less than 250% of the federal poverty level ($30,350 for singles, $41,150 for a couple and $62,750 for a family of four). Below that income level, you qualify for an additional "cost-sharing subsidy," which helps reduce your deductible and co-payments -- but only for silver policies. The cost-sharing "might drop the deductible to $200 per year, more like a gold or platinum policy," says Karen Pollitz, senior fellow with the Kaiser Family Foundation. The typical silver plan has a deductible of about $3,500 per person, she says.
Even though the federal government stopped reimbursing insurers for providing this cost-sharing subsidy, insurers are still required to offer it to consumers. As a result, many insurers increased their premiums for silver-level policies a lot more than they did for the other levels in 2018 and are expected to do so again in 2019. But higher silver premiums mean that policyholders get a larger subsidy, so most people getting a subsidy haven't been affected by the increase. The size of the subsidy is based on the silver plan premiums, but you can use the subsidy on any type of plan. "It significantly increased the number of people who were eligible for zero-premium bronze plans," says Pollitz.
What States Are Doing
As the federal government rolls back sections of the Affordable Care Act, the type of coverage you can buy and how much it will cost are increasingly determined by where you live. Some states have introduced legislation to bolster their insurance marketplace, while others have embraced Congress's moves to weaken the ACA. For a better sense of the trends playing out around the country, consider how the health insurance marketplace is changing in these four states.
California. The state has worked with insurers to maintain as much stability in its individual health insurance marketplace as possible, says Rabah Kamal, a policy analyst with the Kaiser Family Foundation. State lawmakers are currently considering a bill to limit the sale of short-term insurance policies and association health plans that lack robust consumer protections. Blue Shield of California and Kaiser Permanente control the largest slice of the market, but most shoppers have other options, with 11 companies selling policies on the exchange. Still, people in some rural areas of northern California have a slimmer menu -- or in some cases, a single plan. Premiums for policies on the exchange are expected to rise by less than 9% on average for 2019.
Iowa. The Hawkeye State has used changes at the federal level as an opportunity to weaken the ACA and deregulate its individual health insurance marketplace, says Sabrina Corlette, research professor at the Georgetown University Center on Health Insurance Reforms. The state has given the green light to a controversial Iowa Farm Bureau Federation plan to sell policies that don't comply with ACA regulations. The plans offer limited benefits, do not meet benchmarks required by the ACA, and can deny coverage to people with preexisting conditions or charge premiums based on a person's health.
Those who buy their own health insurance in Iowa will have three choices of carriers for 2019, after having only one option this year. After sitting out 2018, WellMark Blue Cross and Blue Shield will return to the individual marketplace for 2019. Medica continues to offer individual coverage and will expand its coverage to include a broader network of health care providers. Premiums, after increasing 57% last year, are expected to remain flat or decrease up to 5%.
Minnesota. After large rate decreases in 2018, people who buy health insurance from the state's individual marketplace will likely see premiums fall an additional 3% to 12% for 2019. What's driving the decrease? The state's reinsurance program, which pays insurers who sell plans to people with high medical costs. But that program is scheduled to expire at the end of 2019, which would cause rates to spike again. All four of the state's carriers that sell insurance on the exchange primarily offer narrow-network plans, but two companies, UCare and Medica, have plans with a broader network of providers.
New Jersey. Before the Affordable Care Act, New Jersey had among the most robust insurance regulations in the country, but the state largely rejected the ACA in recent years, says Corlette. Now, with a new governor at the helm, the state has added a state-level mandate requiring residents to have health insurance or pay a penalty (after the penalty to enforce the individual insurance mandate was repealed at the federal level). In 2019, the state will charge residents without health insurance 2.5% of their annual household income, or a per-person fee of up to $2,085, whichever is higher.